Water resources, tax policy should be among top priorities

Despite deliberations, govt fails to finalise national water policy in four years

ISLAMABAD: Immediately after assuming his office, Prime Minister Shahid Khaqan Abbasi assured the nation that he was not there to merely keep the seat warm, but would do the work of months in the number of days available.

Early signs are that he is keeping his word. His immediate decisions to create the Ministry of Energy by merging petroleum and power, merging textiles with commerce and creating a Ministry for Water Resources were much needed and widely welcomed.

Also by not getting involved with minor issues such as granting permission to government officials to travel abroad would mean that he would be able to focus on bigger issues facing the country.



Some of these larger issues are well known and have been priority areas of PML-N since the party assumed power in 2013. These include the energy crisis, overcoming terrorism and setting the economy on a growth path.

In each of these areas, there has been a considerable progress, although it will be a while before these are satisfactorily resolved to allow us to lower our guard.

However, there were some other important areas where either the government did not focus or has not been able to make any progress. These include worsening water scarcity, repressive tax policy and consequential dwindling exports, standstill of privatisation and archaic bureaucracy.

Numerous consultants and others have studied these issues in depth and submitted their reports. These reports have been reviewed several times, but no decisions have been taken for their implementation.

Even if these decisions cannot be implemented within the short time before the coming elections, setting of the right direction would be a big step forward. Here are four priority areas and suggested course of action.

Water resources

Water scarcity in Pakistan is one of the most serious issues, but has received very little attention.

According to International Monetary Fund (IMF) estimates, demand for water is projected to reach 274 million acre-feet (MAF) by 2025, while supply is expected to remain stagnant at 191 MAF, resulting in a demand-supply gap of approximately 83 MAF.

Such a scenario could threaten all aspects of the national economy and unity. Experts have been urging successive governments to urgently develop an integrated approach to water resource management to cope with the impending crisis.

The current government has been deliberating on a national water policy for the last four years, but has not been able to finalise it. Now that we have a dedicated Ministry of Water Resources, it should be able to give a forward-looking national policy within a matter of weeks.

Tax policy and trade facilitation

Pakistan has one of the poorest tax systems in the world. It is complex, non-transparent, unjust and anti-growth.

Despite having the highest tax rates in the world, the country’s tax revenue as a proportion of gross domestic product (GDP) of around 11% is among the lowest.



Due to various regulatory duties and surcharges, Pakistan has become one of the least competitive countries with a very high anti-export bias.

Similarly, the cost of exports/imports exceeds 15% of the value of goods. This is far more than the tariffs we pay in other markets.

If we can simplify the systems and make them more transparent, this could considerably improve our doing business ranking, revive exports and attract higher foreign direct investment.

Privatisation

In its previous tenures, the PML-N government had a good track record of privatization, but this time around it failed to deliver much.

At the beginning of the year, the government made a firm commitment to privatise at least three major public sector entities ie Pakistan Steel Mills (PSM), Pakistan International Airlines (PIA) and the Oil and Gas Development Company Limited (OGDCL) by June 2017. All the groundwork was done, but with no result.

If the current government is able to sell any of these or other state-owned enterprises, it could bring the budget deficit down and add much-needed resources to the government exchequer.

Reforming bureaucracy

The current working of the government is seriously outdated and a major hindrance to development.

A National Commission for Government Reforms, headed by Dr Ishrat Husain, had carried out extensive studies and consultations with various stakeholders over a period of almost 10 years. An action plan is ready for implementation.

According to authors of the report, the reform recommendations can be implemented without much difficulty. These reforms could greatly help bring in professionalism, improve delivery of services and accountability.

While there are many other areas in need of reforms, these four are comparatively low hanging fruits, but with the greatest impact. Since considerable spadework has already been done in all these areas, no further studies are needed.

What is required is a final review of the recommendations and their implementation.

The writer served as Pakistan’s ambassador to the WTO from 2002 to 2008

Published in The Express Tribune, August 21^st, 2017.

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